Chemical Banking Corp. has adopted a cautious marketing strategy for holding on to the retail customers of Manufacturers Hanover Corp.

While the New York giant has trumpeted its merger with Hanover to Wall Street and corporate customers, it's taken the exact opposite approach with consumers.

The reason: Chemical doesn't want to risk alienating Hanover customers before the merger's early kinks are worked out.

"The first lesson you learn in marketing and advertising is that you don't want to create an expectation level you can't deliver on," said Edward D. Miller, a Chemical vice chairman and Hanover's former retail banking chief.

"If you create a common advertising campaign and people think they can do business at either bank and they can't, you've caused confusion and degraded service," he said.

Evolutionary Approach

Marketing experts say that Chemical's strategy is very much in keeping with its evolutionary approach to the merger. After the holding companies merged last Dec. 31, Chemical decided to wait six months to combine the lead banks - the maximum allowed by regulators.

"The steady-as-she-goes approach is the only one that they can go ahead with, given the choices they've made," said Steve Rivkin, president of Rivkin & Associates, a marketing consulting firm based in Midland Park, N.J. "They are proceeding very slowly and very cautiously with this, and will only advertise when there's something that consumers can act on."

The strategy carries the risk of delaying some of the merger's expected benefits. Chemical won't roll out its advertising campaign for consumers until this fall - some nine months after the deal's completion.

Separate Images

Meanwhile, Chemical and Hanover retain their own signs, their own ad budgets, and their own branches. Chemical did not even advertise that its flagship banks merged their key funds-transfer systems last week.

As recently as a month ago, a large Hanover sign was installed at an automated teller machine vestibule in lower Manhattan. Why go to the trouble and expense when another new sign will go up in a few more months? Marketing experts say the bank doesn't have a choice.

"There will be some things they do that will seem a waste," said Robert Moss, president of Competitrack Inc., a financial advertising tracking firm. "But it's a very sensitive issue because customers develop loyalties over the years."

Robert Hutchinson, executive vice president in charge of retail marketing, said the aim is to reassure customers of both branch systems that all is business as usual.

Come fall, however, the first of some 80 branches will start to close, checking account statements will convert to Chemical's format, and the Hanover name will all but disappear.

Biggest Branch System

Chemical has a lot at stake. It has the biggest branch system in the tri-state metropolitan region of New York, New Jersey, and Connecticut, with 480 locations after consolidating the 80 branches.

"At the new Chemical, regional banking is local banking," the company's annual report brags. But it's precisely the local reaction to the merger that executives worry about most.

Hanover has nearly 600,000 "household relationships" and consumer deposits of more than $16 billion. It has been doing business under the Manufacturers Hanover name since 1966. How many of those customers will bolt when the old name and perhaps the old branch are no longer there?

"The risk is more than manageable," Mr. Hutchinson maintains.

The company will continue to advertise both the Chemical and Hanover franchises throughout the summer. However, Hanover-related advertising will gradually diminish throughout the season, a bank spokesman said.

Chemical's corporate campaign - built around the theme, "Intellectual Currency - Capital Strength" - is itself no longer accentuating the merger. The ads, directed at the investment community and large corporate clients, focus on the talents of Chemical members and individual product lines and no longer mention the merger in the text.

"We think we've moved beyond that stage," said Charles Salmans, Chemical's senior vice president of corporate marketing and advertising. "The merger has become more a fact of life."

The corporate campaign is expected to continue running into 1993 - meaning it will cross with the merger-related consumer campaign that should debut in October. Chemical insists that the public won't be confused, though Mr. Hutchinson declined to give details of the retail campaign.

"That's top secret," he said.

Chemical, of course, is not relying totally on the ignorance of its retail customers. It knows that some are worried - fearful about their deposit insurance the job security of their friendly teller, the future of their corner branch.

For the past several months, Chemical has sent letters and statement stuffers to customers on Chemical and Hanover letterhead with information about the merger.

A recent missive told customers that "this merger will not affect the way you currently bank," and reminded them to continue to do business at their local branch.

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